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Large Portfolio Risks: How Roux can Help with Decision Analysis

Posted on March 18, 2021

Decision Analysis for Large Portfolio Risks

As an underwriter, the company’s performance depends on your team’s ability to balance losses and premiums. If you underwrite large portfolios with numerous and diverse risks, you know how quickly moving from the balance beam to a tightrope can occur.

Determining the dollar value of large portfolio losses is desirable. Getting there is difficult. There isn’t bandwidth to process the hundreds or thousands of exposures, integrate them with relevant loss data, and value losses for different risks under uncertainty. The default is qualitative risk ranking assessments that have limited decision-making power.

If your underwriting team is looking for support moving from qualitative to quantitative decision analysis for large portfolio risks, Roux can help.

Our experts recently supported a carrier forecast losses from an energy portfolio with thousands of exposures and multiple risks. Our quantitative approach provided the probability of aggregate losses triggering coverage at each layer. We filled information gaps and modeled uncertainty in loss severity with years of environmental due diligence, response, underwriting, claims, and litigation experience. Ultimately, the carrier had confidence knowing the premium-risk tradeoff among the excess coverage layers.

Roux’s approach and experience facilitates quantitative risk assessments, allowing your team to:

  • Determine the likelihood of achieving your goal profitability, whether at the primary level or a layer among the excess tower;
  • Decide the level of the tower where you feel most comfortable based on the premium-risk tradeoff and your ability to influence loss controls;
  • Identify the risks, exclusions, deductible level, or loss control measures most influential to the likelihood of achieving a given level of profitability;
  • Rapidly evaluate and compare alternative coverage scenarios and configurations; and
  • Clearly explain and demonstrate the basis of your team’s decision with a single chart.

If you are underwriting risks for large portfolios of any business/operation and are interested in learning how Roux can facilitate your decision-making, please click below:

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